Looks like my gut feeling last week was right: the Reserve Bank did indeed decide to raise the official cash rate by 25 basis points. That makes it the sixth rise in less than a year, so let’s hope it’s the last one for a while.
All the major banks were very quick to implement their own rises today – the Commonwealth Bank was the first to lift its rates, putting the variable home loan rate up 0.25 per cent to 7.36 per cent, and they were closely followed by National Australia Bank, Westpac and the ANZ. The impact of the rises on the average mortgage holder – thinking about someone with a $300,000 home loan – will be close to $50 a month extra in interest payments.
The good news is that the Reserve Bank governor, Glenn Stevens, said that they now consider that interest rates have been returned to “about average”, which is what the Reserve Bank has previously said their goal was. So that makes it sound like in the short term at least, we might not be in for any more rises on our mortgage payments. With the inflation rate having slowed down and Australian trade levels looking like returning to previous highs, the Reserve Bank seems pretty happy with the way the Australian economy is going, and it sounds like they don’t see the need to tinker with interest rates too much in the near future.
Interestingly, Prime Minister Kevin Rudd quickly made a statement on the interest rate rise today. His main comment was that it is “a slug for working families and is hard for housing affordability”, saying that the current government is already trying out various measures to ensure housing remains affordable for the average Australian, including using rental affordability funds to assist those who need it.
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